2016-05-19

Want Some Securitized Chinese Bank NPLs?

In 2008 China suspended asset securitization and now it's back as Chinese banks need to unload bad loans.

According to "21st Century Business Herald" message, there are close inter-bank market sources, the Bank of China as the initiator of the first only bad asset-backed securities - the reputation of the first part of 2016 non-performing asset-backed securities (hereinafter referred to as the reputation of a) the "prospectus" was announced May 19.

The so-called non-performing loan securitization, refers to a particular combination of commercial banks non-performing loans, by way of stocks or bonds packaged for sale to investors. Commercial banks can recover earlier cash flow, improve mobility, and will be written off bad loans from the table, to improve the performance of commercial banks to the financial statements.

In the industry view, the development of non-performing asset securitization can help lift risk appetite of commercial banks and defuse financial assets Shortage market.

Bank of China is working on a landmark securitisation of non-performing loans, in a key test of a financing tool designed to help lenders deal with a serious slowdown in the PRC economy.

China's fourth-largest lender plans to sell securities backed by bad loans as early as this month in the first deal of its kind since 2008.

Regulators are promoting the format again after NPLs in the banking sector jumped about 51 percent year on year to 1.27 trillion renminbi ($194 billion) as of end-2015. Total NPLs rose again to 1.39 trillion renminbi at the end of March, the banking watchdog said last week.